Senate antitrust leader fears Comcast will kneecap Hulu

If Comcast does buy NBC, the government should require the new company to …

As a child growing up in Wisconsin, visits to the department store Kohl's were a yearly rite of passage, providing a pair of back-to-school pants at 50 percent off. My youthful self—squirming in discomfort every time mom called back into the changing room, "How do those fit in the crotch?"—could never have predicted that one day, decades in the future, the owner of that store would sit in Congress... and try to keep Comcast away from Hulu in an effort to defend Internet delivery of shows like Lost.

What does Kohl want? Comcast to stay out of Hulu after any purchase. When does he want it? Within a year.

Out of Hulu for good

Kohl's concern is that "over-the-top" Internet-delivered video poses a serious challenge to the existing business model of a cable company like Comcast. If Comcast acquires NBC and takes over NBC's 32 percent stake in Hulu, the company might be tempted to cripple the service, or weigh it down with enough conditions to make sure people stick with expensive, separate cable subscriptions. Kohl writes:

Millions of consumers have begun to utilize Internet web sites such as Hulu to view full-length programming that has traditionally been shown on cable and broadcast television.

And, numerous companies are experimenting with new business models for delivering content directly to consumers over high speed internet connections—including television and blue-ray disc manufacturers, Apple TV, Roku, Boxee, and Zillion TV, to give a few examples. Industry reports have estimated that 800,000 households have even dropped their traditional MVPD [multichannel TV] subscriptions, preferring to view video content over the Internet (often referred to as "cord-cutters"). It is clear that video over the Internet has the real potential to become a strong competitive alternative to traditional MVPD providers and offer consumers new choices to obtain video programming without expensive MVPD subscriptions.

Herb Kohl (or, most likely, a staffer) knows about Boxee! And Roku! And he's interested in Internet video! This is such terrific stuff that we'll forgive him for the "blue-ray" comment.

"After the acquisition, Comcast will have the incentive to exercise its influence as a part owner of Hulu to ensure it does not become a competitive threat to Comcast's cable television services," the letter continues. "If Comcast exercised such a strategy, it could effectively starve these new, emerging Internet distributors of the content they need to compete. Comcast has already begun to roll out its 'TV Everywhere' model of distribution, under which Comcast subscribers can have full access to their cable programming wherever they are. While this business model unquestionably offers benefits to consumers, it also could potentially harm competition should it become the exclusive manner in which programmers deliver their content over the Internet."

In Kohl's view, Comcast should be forced to divest NBC's stake in Hulu within one year of the acquisition. In addition, he wants "a requirement that Comcast not seek to prevent or coerce programmers from keeping their content off Internet web sites or Internet distributors as a condition of carriage on Comcast."

Of course, a cable ISP has all sorts of ways to obtain a similar outcome. One could simply slap tiny data caps on the "Internet access" side of the business, high enough to do Web surfing but low enough to prevent large-scale video viewing. (To its credit, Comcast's published caps have been a relatively generous 250GB per month.) One could throttle video sites like Hulu. (Comcast's recent win in court against the FCC has effectively abolished the agency's existing claims to net neutrality oversight.)

Kohl's requests bring political pressure on the agencies to impose these kinds of conditions, but Kohl has no direct authority over the deal.

Comcast sent over a statement about the letter, one expecting "that any conditions will not unduly burden either Comcast or NBCU’s businesses."

I'm seeing a different problem here: Isn't much of the content on Hulu from NBC? All the good prohibiting them from blocking Hulu does if they're still allowed to deprive Hulu of half of its existing content.

This whole exercise seems very silly. The problem with Comcast owning NBC is that it creates bad incentives to make NBC content Comcast-preferred or Comcast-exclusive, which is obviously anti-competitive. But that's the main benefit to Comcast of buying them. Approving the merger at all makes no sense: Either they approve it with sufficient restrictions to alleviate the harm to competition in content delivery but in so doing defeat the purpose of the merger, or they let Comcast (and the other ISPs sure to follow in its footsteps if this precedent is set) eliminate or cripple their non-ISP competitors by depriving them of the content from major networks. Better to just tell ISPs that they can't own content providers and not have to try to square the circle.

I'm seeing a different problem here: Isn't much of the content on Hulu from NBC? All the good prohibiting them from blocking Hulu does if they're still allowed to deprive Hulu of half of its existing content.

This whole exercise seems very silly. The problem with Comcast owning NBC is that it creates bad incentives to make NBC content Comcast-preferred or Comcast-exclusive, which is obviously anti-competitive. But that's the main benefit to Comcast of buying them. Approving the merger at all makes no sense: Either they approve it with sufficient restrictions to alleviate the harm to competition in content delivery but in so doing defeat the purpose of the merger, or they let Comcast (and the other ISPs sure to follow in its footsteps if this precedent is set) eliminate or cripple their non-ISP competitors by depriving them of the content from major networks. Better to just tell ISPs that they can't own content providers and not have to try to square the circle.

Sure but isn't that also being a bit fearful about something that hasn't happened yet. Its not like customers would sit there a take it and it would most likely put Comcast in the anti-trust limelight if they do which is a big enough deterrent as it is with no need to make a huge deal out of it.

It is my opinion that instead of toying with ideas on how to preserve competition, that they should just say no. Too many companies are vertically integrated to the point that it creates massive anti-competitive behavior Apple is a classic example, ISPs are even worse with there triple play bundles. I think This case should stop that behavior and I vote NO on the Comcast/NBC merger.

For them to own the pipes and content I think it gives way to much power for Comcast to manipulate markets. Worse, it will start a buy up trend by other ISPs. Fox will buy Quest. AT&T will buy CBS and then Verizon will merge with ABC/Disney and then all the content gets divided up. It creates a night mare senerio where if you want the content you originally enjoyed on one content delivery service, now it creates a market of I have to have multiple networks to get all the content I use to enjoy. Worse yet it consolidates industries into these super massive corporations that are "too big to fail". And the death of internet distribution happens. The market collapses to a few super powerful players that manipulate the market and the barrier of entry to compete gets impossibly high. All in a desperate play to keep ISPs from turning into dum pipes.

Its an extreme slippery slope argument, but I think it should be nipped in the bud.

Like others have said, this really doesn't solve the problem of comcast simply doing things with the actual content allowed on hulu and others (when/price/etc). Force them to accept a compulsory license for streaming the content for long enough that they won't be able to kill it. Considering the copyright on the content is going to last longer than most people will live, requiring it to last at least 20-30 years after the merger would be a nice start combined with the requirements Kohl mentions.

It is my opinion that instead of toying with ideas on how to preserve competition, that they should just say no. Too many companies are vertically integrated to the point that it creates massive anti-competitive behavior Apple is a classic example, ISPs are even worse with there triple play bundles. I think This case should stop that behavior and I vote NO on the Comcast/NBC merger.

It's not vertical integration that we're after, it's horizontal integration. I'm shocked that so many people seem to confuse the two. Vertical integration is what Apple does, and it's perfectly fine to do so. They're competing in ONE industry and they're offering an integrated product among competitors. Horizontal integration is actually consolidation of companies from different industries, which is what this Comcast and NBC merger is. They offer products in different industries, but they could control their product in one industry by influencing it with another product in a different industry. Arguably they could use horizontal integration to block out competition. So that's why Comcast and NBC together is so troubling.

It is my opinion that instead of toying with ideas on how to preserve competition, that they should just say no. Too many companies are vertically integrated to the point that it creates massive anti-competitive behavior Apple is a classic example, ISPs are even worse with there triple play bundles. I think This case should stop that behavior and I vote NO on the Comcast/NBC merger.

For them to own the pipes and content I think it gives way to much power for Comcast to manipulate markets. Worse, it will start a buy up trend by other ISPs. Fox will buy Quest. AT&T will buy CBS and then Verizon will merge with ABC/Disney and then all the content gets divided up. It creates a night mare senerio where if you want the content you originally enjoyed on one content delivery service, now it creates a market of I have to have multiple networks to get all the content I use to enjoy. Worse yet it consolidates industries into these super massive corporations that are "too big to fail". And the death of internet distribution happens. The market collapses to a few super powerful players that manipulate the market and the barrier of entry to compete gets impossibly high. All in a desperate play to keep ISPs from turning into dum pipes.

Its an extreme slippery slope argument, but I think it should be nipped in the bud.

They already own the pipes and content. They already own G4, for example. Time Warner also owns plenty of content along with the pipes -- look at HBO. They did even once own their own broadcast network too. The other service providers PAY the content providers to carry their channels online and off so they always have incentive to do business with their competitors. Do I think it is a bad idea? Yes. History tells us that it won't, however, lead to the land grab and segmentation you're describing.

Cablevision on the other hand is all to happy to withhold the channels it owns (MSG/MSG-HD) from its competitors and then advertise that they aren't available on the competition.

It is my opinion that instead of toying with ideas on how to preserve competition, that they should just say no. Too many companies are vertically integrated to the point that it creates massive anti-competitive behavior Apple is a classic example, ISPs are even worse with there triple play bundles. I think This case should stop that behavior and I vote NO on the Comcast/NBC merger.

For them to own the pipes and content I think it gives way to much power for Comcast to manipulate markets. Worse, it will start a buy up trend by other ISPs. Fox will buy Quest. AT&T will buy CBS and then Verizon will merge with ABC/Disney and then all the content gets divided up. It creates a night mare senerio where if you want the content you originally enjoyed on one content delivery service, now it creates a market of I have to have multiple networks to get all the content I use to enjoy. Worse yet it consolidates industries into these super massive corporations that are "too big to fail". And the death of internet distribution happens. The market collapses to a few super powerful players that manipulate the market and the barrier of entry to compete gets impossibly high. All in a desperate play to keep ISPs from turning into dum pipes.

Its an extreme slippery slope argument, but I think it should be nipped in the bud.

I seriously hope what you say happens: that ISPs will buy up the networks. Then we will see true competition, and better quality in content as well as lower prices. And the advertisers will know or sure how many customers they are dealing with rather than relying on some bogus rating.